Is The VIX For Real?

There's been lots of talk about the CBOE Volatility Index (VIX) recently, and not just because it's stuck in the stratosphere. Some traders have raised controversy about whether it is an accurate reflection of volatility in the market place, especially after the October VIX futures expiration. They were upset about the disconnect between the VIX futures, which closed around 53, and the VIX calculation itself the next day. The futures were subject to a final settlement with that calculation and it came in at around 64. "Ouch!" if you were short. But, it's highly likely that those traders don't understand the VIX.

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